Academy taking a larger cut from cost of `Navy' souvenirs

Annapolis merchants are not all happy about paying royalty

July 29, 1999|By Neal Thompson | Neal Thompson,SUN STAFF

At the height of the summer season in downtown Annapolis, tourists along Main Street are scarfing up T-shirts, coffee mugs and key chains emblazoned with "Navy," "Naval Academy" or pictures of the school mascot, Bill the Goat.

Unknown to most shoppers, each of these purchases funnels a handful of pennies into the academy's coffers, where it pays for sports and other extras at the school not covered by its main benefactor, the Pentagon.

Academy paraphernalia has long been a staple of downtown Annapolis shops. But for the past decade, the academy has been seeking a larger cut of the profits made in its name.

Last year, 7.5 cents of each dollar spent on Navy umbrellas, scarves and baby bibs went back to the academy. This summer, the academy bumped its take up to 8 cents.

Some downtown shop owners, who for decades borrowed the academy's name and logos without sharing any profits, are bitter.

They say paying royalties became doubly painful after the academy opened its Visitor's Center Gift Shop in 1995, where it sells Navy and Marine Corps clothing and other items and competes directly with them.

"We feel somewhat betrayed," said Phil Walsh, owner of Fit to a Tee, a T-shirt shop that has been on Main Street since 1987. The combination "has taken away a huge percentage of our business."

A growing number of colleges and universities are cashing in on school names and teams. Some have gone a step further and allowed advertisements on the floors of basketball arenas, the scoreboards of football stadiums and the backs of stadium chairs.

Name marketing has grown into a lucrative fund-raising tactic, even as some college athletic departments acknowledge that it represents a growing commercialization of collegiate sports.

Naval Academy officials say they are walking a "sophisticated line" between making extra money and becoming too commercialized. But they say they are merely keeping up with the rest of the world of college sports.

"It's very common to do this," said Jack Lengyl, the academy's athletic director and head of the Naval Academy Athletic Association (NAAA), which runs the school's licensing program. "Athletic departments have to be more entrepreneurial."

Large schools with well-known football programs, such as Ohio State and the University of Southern California, were trendsetters in the early 1980s when they registered their logos with the Patent and Trademark Office, part of the U.S. Department of Commerce.

Hundreds of other schools have followed suit.

The U.S. Military Academy at West Point does it. The University of Maryland and Coppin State do it. Royalties range from 6 cents to 10 cents on the dollar.

The Naval Academy registered Bill the Goat as a trademark in 1987, and since then any retailer who sold an item with Bill's likeness has owed a few pennies to the academy.

In 1993, the academy registered other trademarks, "Naval Academy" and "USNA." In 1996, the school bolstered its trademark and licensing program again by registering the names of many of its varsity sports programs, such as "Navy Lacrosse" and "Navy Soccer."

Retailers using any of those trademarks on items they sell must now obtain a license and pay a licensing fee, or royalty.

The academy has hired a director of marketing and promotions to oversee the licensing program and other efforts to seek corporate and private donations. "I wish there were more merchants on Main Street selling merchandise. They're a great tool for us," said Eric Ruden, the marketing director.

Uberman also thinks royalties are a form of double taxation, since the school is federally funded and, therefore, supported by tax dollars.

According to the NAAA tax records, fees from "licensing and merchandising" brought in an extra $90,574 in 1994 and $171,881 the following year. Since then, those fees have averaged in the low $100,000 range, according to tax records and school officials.

"It's not major cash flow, but it's significant enough. It's dollars that go directly back to support sports programs," Lengyl said. "It's not a lot of money, but it's money we never had before. It's a respectable dollar that fills a little hole."

Occasionally, lawyers have had to remind retailers to send a quarterly check to the academy. Once, the academy had to get a court order to force a West Virginia-based company to stop printing Naval Academy T-shirts without the academy's permission.

Other colleges have gone to court to protect their logos. A Georgia brewer tried selling beer in cans displaying a drunk-looking bulldog, the University of Georgia mascot. The school sued, and the courts forced the brewer to stop selling the beer.

Aside from money, academy officials say registering trademarks gives the school control over its image. They may deny proposals from companies wishing to use Naval Academy logos on toilet seats or prophylactics, for example.

"Being a federal agency, we're very, very sensitive to our image. We're here to keep other people away from prostituting the name," Lengyl said. "Most people understand that. But every once in a while, there will be a store or retailer who will test you."